2014-10-31 08:00:02 CET
2014-10-31 08:00:07 CET
REGULATED INFORMATION
Digia Oyj - Interim report (Q1 and Q3)
DIGIA'S THIRD QUARTER 2014: NET SALES AND OPERATING PROFIT ON A PAR WITH THE PREVIOUS YEAR
Helsinki, 2014-10-31 08:00 CET (GLOBE NEWSWIRE) -- DIGIA PLC INTERIM REPORT 31
October 2014, 09:00 am
DIGIA'S THIRD QUARTER 2014: NET SALES AND OPERATING PROFIT ON A PAR WITH THE
PREVIOUS YEAR
SUMMARY:
January-September
- Consolidated net sales: EUR 70.2 (73.0) million, down 3.8 per cent
- Operating profit EUR 2.0 (2.5) million
- Profitability (EBIT %) 2.9 (3.4) per cent
- Product business accounted for 41.4 (42.5) per cent
- Earnings per share: EUR 0.06 (0.06)
July-September
- Consolidated net sales: EUR 21.7 (21.4) million, up 1.4 per cent
- Operating profit EUR 0.9 (1.0) million
- Profitability (EBIT %)3.9 (4.7) per cent
- Product business accounted for 42.4 (42.3) per cent
- Earnings per share: EUR 0.02 (0.02)
Consolidated net sales and operating profit fell from the previous year's
comparison figures. Net sales decreased in both segments. The decrease can be
primarily attributed to exceptional net sales items included in the previous
year's comparison figures and which did not exist in the reporting period.
In addition, last year's comparison figures for domestic business included a
one-off EUR 2.4 million low-margin maintenance deal for a third-party software
product. Excluding the impact of this deal, net sales from domestic business in
the quarter were on a par with the previous year.
In the Qt business, the net sales recorded in the reporting period for the
five-year deal worth EUR 3.0 million signed in Q2 of last year were EUR 1.1
million lower than in the corresponding period a year earlier. Excluding the
impact of this exceptional deal, Qt's net sales grew by 5.8 per cent, even
though prolonged negotiations on a number of major new deals have held back
growth.
In domestic business, operating profit rose significantly both in the reporting
period and in the third quarter. Meanwhile, the Qt business recorded a loss for
both the reporting period and Q3, as expected, and as a result the company's
net sales fell from previous year's comparison figures.
Overall, Digia expects demand to remain good in all domestic business areas,
but anticipates a slight year-on-year decline in net sales in the final
quarter. Digia also expects to see at least moderate profitability in its
domestic business. The general market uncertainty may, however, reflect on the
company's order book and bid volume development.
Net sales of the Qt business are expected to grow in the final quarter,
resulting in a year-on-year improvement in Qt's full-year net sales. Digia
anticipates Qt's operating profit to be close to zero in the final quarter and
to remain in the red for the full year.
GROUP KEY FIGURES AND RATIOS
7-9/20 7-9/20 Change, 1-9/20 1-9/20 Change,
14 13 % 14 13 %
--------------------------------------------------------------------------------
Net sales 21,732 21,435 1.4 % 70,187 72,959 -3.8 %
--------------------------------------------------------------------------------
Operating profit before 857 997 -14.1 % 2,001 2,456 -18.5 %
extraordinary items
--------------------------------------------------------------------------------
- % of net sales 3.9 % 4.7 % 2.9 % 3.4 %
--------------------------------------------------------------------------------
Operating profit 857 997 -14.1 % 2,001 2,456 -18.5 %
--------------------------------------------------------------------------------
- % of net sales 3.9 % 4.7 % 2.9 % 3.4 %
--------------------------------------------------------------------------------
Net profit 472 454 3.8 % 1,170 1,329 -12.0 %
--------------------------------------------------------------------------------
- % of net sales 2.2 % 2.1 % 1.7 % 1.8 %
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Return on equity,% 5.4 % 4.4 % 4.4 % 4.2 %
--------------------------------------------------------------------------------
Return on capital invested, % 6.4 % 6.4 % 5.6 % 5.7 %
--------------------------------------------------------------------------------
Interest-bearing liabilities 18,873 18,864 0.0 % 18,873 18,864 0.0 %
--------------------------------------------------------------------------------
Cash and cash equivalents 2,902 6,997 -58.5 % 2,902 6,997 -58.5 %
--------------------------------------------------------------------------------
Net gearing 45.3 % 28.4 % 45.3 % 28.4 %
--------------------------------------------------------------------------------
Equity ratio, % 50.7 % 54.8 % 50.7 % 54.8 %
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Earnings per share, EUR, 0.02 0.02 0.06 0.06
undiluted
--------------------------------------------------------------------------------
Earnings per share, EUR, 0.02 0.02 0.06 0.06
diluted
--------------------------------------------------------------------------------
MARKETS AND DIGIA'S BUSINESS OPERATIONS
DOMESTIC SEGMENT
The general economic conditions are making companies increasingly cautious;
this continues to translate into prolonged decision-making and growing cost
pressure in competitive bidding procedures.
The Integration, Analytics and Site Optimization business showed positive
overall development during the reporting period.
Similarly, demand for ERP systems was healthy, although there were significant
differences in demand between sectors. Despite long sales cycles, the order
book and bid volumes remained healthy.
Market uncertainty was most clearly reflected in the business for tailored
solutions and services, where the customers' cost pressure is eroding business
profitability significantly. Demand for services has remained relatively good,
but with notable differences between sectors.
QT SEGMENT
Qt business failed to reach its net sales targets for the reporting period.
Key factors contributing to poor net sales performance included prolonged sales
periods concerning major deals.
The Qt business recorded a loss for the reporting period. This could be
attributed to weaker-than-expected net sales development and to the company's
determined and strong investments in business development to enable future
growth.
The Qt user ecosystem has seen powerful growth. The new version, Qt 5.3,
launched in May 2014 has been downloaded more than 1,000,000 times. Feedback
from users has been extremely positive.
During the period, Digia continued to implement the previously reported Qt
product development plans, which included launching a new Qt product site. The
www.qt.io site will serve as the central source of information for Qt ecosystem
events and the upcoming changes in the open source code licence for the new Qt
5.4. The objective of licensing changes is to promote the sale of commercial
licences to commercial players. Special attention has been paid to other
aspects of sales development, with several projects designed to generate net
sales growth currently in progress.
NET SALES
Digia's consolidated net sales for the reporting period totalled EUR 70.2
(73.0) million, down 3.8 per cent on the same period a year earlier.
Net sales from the domestic segment decreased by 4.2 per cent to EUR 55.6
(58.1) million. Net sales from the Qt segment amounted to EUR 14.6 (14.9)
million, showing a decrease of 2.3 per cent.
The net sales decline in the domestic business could be primarily attributed to
the fact that last year's comparison figures included a one-off EUR 2.4 million
low-margin maintenance deal for a third-party software product. Excluding the
impact of this deal, net sales from domestic business in the quarter were on a
par with the previous year.
Similarly, the net sales decline in the Qt business could be attributed to an
exceptional net sales item included in last year's comparison figures. Net
sales in the reference period last year, generated by this five-year deal worth
EUR 3.0 million signed in Q2 last year, were EUR 1.1 million higher than those
recorded for the reporting period. Excluding the impact of this exceptional
deal, Qt net sales grew by 5.8 per cent, although prolonged sales periods on a
number of major new deals have held back growth.
During the reporting period, the product business accounted for EUR 29.1
million (1-9/2013: EUR 31.0 million), or 41.4 (42.5) per cent of consolidated
net sales.
International operations accounted for EUR 14.5 million (1-9/2013: EUR 15.8
million), or 20.6 (21.6) per cent of consolidated net sales during the
reporting period.
Digia's consolidated net sales for the third quarter were EUR 21.7 (21.4)
million, up 1.4 per cent from the same period a year earlier.
In the third quarter, net sales from the domestic segment increased by 2.3 per
cent to EUR 16.8 (16.4) million, while net sales from the Qt business decreased
by 1.7 per cent to EUR 4.9 (5.0) million.
During the quarter, the product business accounted for EUR 9.2 (9.1) million,
or 42.4 (42.3) per cent of consolidated net sales.
International operations accounted for EUR 5.0 (5.0) million, or 23.0 (23.4)
per cent, of consolidated net sales in Q3.
PROFIT PERFORMANCE AND PROFITABILITY
Digia's consolidated operating profit for the reporting period was EUR 2.0
(2.5) million, down 18.5 per cent from the same period a year earlier.
Profitability (EBIT%) was 2.9 (3.4) per cent.
Digia's consolidated operating profit for the third quarter was EUR 0.9 (1.0)
million, down 14.1 per cent from the same period a year earlier. Profitability
(EBIT%) was 3.9 (4.7) per cent.
Operating profit from domestic operations for the reporting period totalled EUR
3.6 (2.7) million, up 31.9 per cent, and profitability (EBIT%) was 6.5 (4.7)
per cent. Operating profit from domestic operations in the third quarter grew
by 7.4 per cent to EUR 1.2 (1.1) million, and profitability (EBIT %) was 7.1
(6.8) per cent.
Operating profit in the Qt business fell by 465.1 per cent to EUR -1.6 (-0.3)
million, while profitability (EBIT %) was -11.1(-1.9)per cent. Operating profit
in the Qt business in the third quarter fell by 191.1 per cent to EUR -0.3
(-0.1) million, while profitability (EBIT %) was -6.9 (-2.3) per cent.
After a weak first half, operating profit from domestic operations stabilised
at a moderate level.
In the Qt business, investments made to boost business growth reduced
profitability, as expected. Profitability was also adversely affected by the
weak net sales performance in the reporting period. Qt business has recorded a
loss throughout the reporting period. However, since the first quarter business
has seen positive development and losses from operations have been minor.
Consolidated earnings before taxes for the period totalled EUR 1.5 (1.9)
million, and net profit was EUR 1.2 (1.3) million. Consolidated earnings before
taxes for the third quarter amounted to EUR 0.5 (0.7) million, and net profit
after taxes totalled EUR 0.5 (0.5) million.
Earnings per share in the reporting period were EUR 0.06 (1-9/2013: EUR 0.06),
while earnings per share for the third quarter were EUR 0.02 (Q3/2013: EUR
0.02).
The Group's net financial expenses for the reporting period were EUR 0.5 (0.5)
million and for the third quarter EUR 0.3 (0.3) million.
FINANCIAL POSITION AND EXPENDITURE
At the end of the reporting period, the Digia Group's consolidated balance
sheet total stood at EUR 79.6 million (12/2013: EUR 83.3 million) and the
equity ratio was 50.7 (12/2013: 49.9) per cent. Net gearing was 45.3 per cent
(12/2013: 28.9 cent). Cash and cash equivalents at the end of the period
totalled EUR 2.9 (12/2013: 6.5) million.
Interest-bearing liabilities amounted to EUR 18.9 (12/2013: 16.9) million at
the period end. These consisted of EUR 17.7 million in loans from financial
institutions and EUR 1.2 million in financial leasing liabilities.
Consolidated net cash flow from operating activities for the period was
negative by EUR 3.6 million (1-9/2013: positive by EUR 1.7 million). Cash flow
from investments for the period was negative by EUR 0.9 (0.4) million. Cash
flow from operating activities for the period was positive by EUR 1.0 million
(1-9/2013: negative by EUR 2.6 million) with a EUR 2.8 million positive net
impact of loans on cash flow. Repayments of bank loans totalled EUR 2 million,
short-term loan withdrawals amounted to EUR 3.0 million and long-term loan
withdrawals to EUR 1.8 million.
The Group's investments in fixed assets during the period totalled EUR 0.8
(0.4) million.
Return on investment (ROI) for the period was 5.6 (5.7) per cent, and return on
equity (ROE) was 4.4 (4.2) per cent.
The Group carries out quarterly impairment testing of goodwill and intangible
assets with an indefinite useful life.
The table below shows the distribution of goodwill and values subject to
testing at the end of the reporting period:
EUR 1,000 Specified Amortisations Goodwi Other Total value
intangible during the ll items subject to
assets reporting period testing
--------------------------------------------------------------------------------
Digia, 946 367 37,987 5,573 44,506
domestic
business
--------------------------------------------------------------------------------
EUR 1,000 Specified Amortisations during Goodwi Other Total value
intangible the reporting period ll items subject to
assets testing
--------------------------------------------------------------------------------
Digia, Qt 6,363 519 6,562 1,912 14,838
business
--------------------------------------------------------------------------------
EUR 1,000 Specified Amortisations during Goodwi Other Total value
intangible the reporting period ll items subject to
assets testing
--------------------------------------------------------------------------------
Digia 7,310 886 44,550 7,484 59,344
Group,
total
--------------------------------------------------------------------------------
Present values for domestic operations were calculated for the five-year
forecast period based on the following assumptions: Net sales and operating
profit for the first three quarters of the forecast period according to the
confirmed figures for the latest three quarters, and for the following quarter
according to budget; after this, annual growth in net sales of 3.0 per cent and
in operating profit of 8.0 per cent, and a pre-tax discount rate of 8.9 per
cent. Cash flows following the forecast period were extrapolated using the same
assumptions as for the forecast period.
According to a sensitivity analysis, the goodwill related to domestic
operations requires either net sales to remain at the current level with
profitability of 4.7 per cent, or a 3.0 per cent growth in net sales with
profitability of 2.6 per cent. The management sees no risk of goodwill
impairment associated with domestic operations.
Present values for the Qt business were calculated for the five-year forecast
period based on the following assumptions: Net sales and operating profit for
the first three quarters of the forecast period according to the confirmed
figures for the latest three quarters, and for the following quarter according
to budget; after this, annual growth in net sales of 6.5 per cent and in
operating profit of 5.3 per cent, and a pre-tax discount rate of 8.9 per cent.
Cash flows following the forecast period were extrapolated using the same
assumptions as for the forecast period.
According to a completed sensitivity analysis, the goodwill of the Qt business
requires either net sales to remain at the current level with profitability of
5.3 per cent, or a 5.0 per cent growth in net sales with profitability of 1.5
per cent. The management sees no risk of goodwill impairment associated with Qt
operations.
PERSONNEL, MANAGEMENT AND ADMINISTRATION
At the end of the period, the total number of Group personnel was 933,
representing a decrease of 5 employees or -0.5 per cent since the end of fiscal
2013 (938). The average number of personnel during the reporting period was
935, which was 4 persons or 0.4 per cent less than the average for fiscal 2013
(939).
Employees by function at the end of the period:
Domestic operations 75 %
-----------------------------------
Qt operations 20 %
-----------------------------------
Administration and management 5 %
-----------------------------------
As of the end of the period, 149 (12/2013: 170) employees were working abroad.
The Digia Plc Annual General Meeting of 11 March 2014 re-elected Päivi
Hokkanen, Robert Ingman, Kari Karvinen, Pertti Kyttälä, Seppo Ruotsalainen,
Leena Saarinen and Tommi Uhari as members of the Board. At the organisation
meeting of the Board, Pertti Kyttälä was elected Chairman of the Board and
Robert Ingman was elected Vice Chairman.
Juha Varelius has been Digia Plc's President and CEO since 1 January 2008.
Ernst & Young Oy, Authorised Public Accountants, are the Group's auditors, with
Authorised Public Accountant Heikki Ilkka as the principal auditor.
Tommi Laitinen, who was previously in charge of the Qt business, left the
company during the reporting period. Digia's CEO Juha Varelius is temporarily
in charge of the Qt business in addition to his other duties. Digia has
initiated a recruitment process to hire a new director for the business.
RISKS AND UNCERTAINTIES
The company's short-term business risks and uncertainties were described in the
2013 Financial Statements. These are unchanged.
Risks and their management are described on the company's website at
www.digia.com.
FUTURE PROSPECTS
The company expects the IT market in Finland to remain at roughly the previous
year's level in 2014.
The objective for the company's domestic operations is to raise profitability
to a good level, and to achieve organic growth at least equivalent to general
market development. Besides organic growth, the company actively pursues
opportunities to make carefully considered business acquisitions that support
its strategy.
Efforts will continue to develop Digia's customer understanding and sales and
service portfolio to ensure that it can offer increasingly competitive services
and solutions for boosting its customers' business efficiency. Measures aimed
at improving the company's operational efficiency will also continue.
Overall, Digia expects demand to remain good in all domestic business areas,
but anticipates a slight year-on-year decline in net sales in the final
quarter. Digia also expects to see at least moderate profitability in its
domestic business. The general market uncertainty may, however, reflect on the
company's order book and bid volume development.
In the Qt business, operational focus is on sales development and on creating
better growth opportunities. Besides making growth-targeted investments, Digia
is also keeping a close eye on business profitability. The objective is to
ensure that income from the Qt business covers its operating expenses.
The Qt order book is satisfactory, considering the time of year and general
market situation, and the company expects to see continued growth in demand in
the large customer segment. However, contract turnaround times in these markets
are very long, typically around 6-18 months, which can cause significant
fluctuation in quarterly net sales and, particularly, profitability.
Digia will continue to invest significantly in Qt business and sales
development. Business development efforts will focus on embedded systems in
automotive, digital TV and DTV receivers. Areas targeted in product development
include value-added features and tools required for building embedded systems.
The sales growth associated with embedded systems will also reflect on the
earnings logic. Licence revenue from these sales accumulates over the longer
term rather than representing a one-time payment.
Net sales of the Qt business are expected to grow in the final quarter,
resulting in a year-on-year improvement in Qt's full-year net sales. Digia
anticipates Qt's operating profit to be close to zero in the final quarter and
to remain in the red for the full year.
OTHER EVENTS DURING THE REVIEW PERIOD
Digia Plc's Annual General Meeting (AGM) was held on 11 March 2014. The AGM
adopted the financial statements for 2013, released the Board members and the
CEO from liability, determined Board emoluments, resolved to keep the number of
Board members at seven (7), and elected the company's Board of Directors for a
new term.
With regard to profit distribution for 2013, the AGM approved the Board's
proposal to make a repayment of capital of EUR 0.10 per share to all
shareholders listed on the shareholder list maintained by Euroclear Finland Ltd
on the reconciliation date of 14 March 2014. The date for the repayment of
capital was set at 21 March 2014.
The AGM granted the following authorisations to the Board:
Authorisation of the Board of Directors to decide on buying back own shares
and/or accepting them as collateral
The AGM authorised the Board to decide on the buyback and/or acceptance as
collateral of not more than 2,000,000 shares in the company. This buyback can
only be executed by means of the company's unrestricted equity. The Board shall
decide on how these shares are to be bought. Own shares may be bought back in
disproportion to the holdings of the shareholders. The authorisation also
includes acquisition of shares through public trading organised by NASDAQ OMX
Helsinki Oy in accordance with the rules and instructions of NASDAQ OMX
Helsinki and Euroclear Finland Ltd, or through offers made to shareholders.
Shares may be acquired in order to improve the company's capital structure, to
fund acquisitions or other business transactions, for offering share-based
incentive schemes, to sell on, or to be annulled. The shares must be acquired
at the market price in public trading. This authorisation supersedes that
granted by the AGM of 12 March 2013 and is valid for 18 months, i.e. until 11
September 2015.
Authorising the Board of Directors to decide on a share issue and granting of
special rights
The AGM authorised the Board to decide on an ordinary or bonus issue of shares
and the granting of special rights (as defined in Section 1, Chapter 10 of the
Limited Liability Companies Act) in one or more instalments, as follows: The
issue may total, at a maximum, 4,000,000 shares. The authorisation applies both
to new shares and to treasury shares held by the company. By virtue of the
authorisation, the Board has the right to decide on share issues and the
granting of special rights, in deviation from the pre-emptive subscription
rights of the shareholders (a directed issue). The authorisation may be used to
fund or complete acquisitions or other business transactions, for offering
share-based incentive schemes, to develop the company's capital structure, or
for other purposes. The Board was authorised to decide on all terms related to
the share issue or special rights, including the subscription price, its
payment in cash or (partly or wholly) in capital contributed in kind or its
being written off against the subscriber's receivables, and its recognition in
the company's balance sheet. This authorisation supersedes that granted by the
AGM of 12 March 2013 and is valid for 18 months, i.e. until 11 September 2015.
In a meeting held on 17 June 2014, Digia Plc's Board of Directors has
authorized the company's management to further streamline the company's
organizational structure between Digia's domestic business and the
international Qt business. This will be carried out by setting up a new company
entity for Qt under the parent company Digia Plc by the end of the year.
SHARE CAPITAL AND SHARES
On 30 September 2014, the number of Digia Plc shares totalled 20,875,645.
According to Finnish Central Securities Depository Ltd, Digia had 4,731
shareholders on 30 September 2014.
The 10 biggest shareholders were:
Shareholder Shares and votes
--------------------------------------------------------------
Ingman Group Oy Ab 20.1 %
--------------------------------------------------------------
Ilmarinen Mutual Pension Insurance Company 14.6 %
--------------------------------------------------------------
Jyrki Hallikainen 7.4 %
--------------------------------------------------------------
Kari Karvinen 6.0 %
--------------------------------------------------------------
Matti Savolainen 5.8 %
--------------------------------------------------------------
Varma Mutual Pension Insurance Company 4.6 %
--------------------------------------------------------------
Nordea Finnish Small Cap investment fund 1.4 %
--------------------------------------------------------------
Investment Fund Säästöpankki Small Cap 1.3 %
--------------------------------------------------------------
Nordea Bank Finland Plc (nominee-registered) 1.3 %
--------------------------------------------------------------
Etola Oy 1.0 %
--------------------------------------------------------------
Distribution of holdings by number of shares held on 30 September 2014
Number of shares Shareholders Shares and votes
-----------------------------------------------------
1 - 100 23.0 % 0.4 %
-----------------------------------------------------
101 - 1,000 58.4 % 5.9 %
-----------------------------------------------------
1,001 - 10,000 16.7 % 10.0 %
-----------------------------------------------------
10,001 - 100,000 1.3 % 8.8 %
-----------------------------------------------------
100,001 - 1,000,000 0.5 % 21.0 %
-----------------------------------------------------
1,000,001 - 4,000,000 0.1 % 53.9 %
-----------------------------------------------------
Shareholding by sector on 30 September 2014
Shareholders Shares
--------------------------------------------------------------------
Non-financial corporations 4.3 % 26.1 %
--------------------------------------------------------------------
Financial and insurance corporations 0.2 % 4.2 %
--------------------------------------------------------------------
General government 0.1 % 19.3 %
--------------------------------------------------------------------
Not-for-profit institutions serving households 0.3 % 1.0 %
--------------------------------------------------------------------
Households 94.6 % 46.9 %
--------------------------------------------------------------------
Foreign holding 0.6 % 2.6 %
--------------------------------------------------------------------
The weighted average number of shares during the reporting period, adjusted for
share issues, was 20,781,888. The number of outstanding shares was 20,775,273
in total at the end of the period.
The company held a total of 57,372 treasury shares at the end of the reporting
period. The accounting counter value of these treasury shares is EUR 0.10 per
share. The company held about 0.3 per cent of the capital stock as of 30
September 2014. Digia has financed the acquisition of 43,000 treasury shares
for distribution through incentive schemes for key personnel. At the end of the
period, 43,000 of these shares remained undistributed and were under the
management of Evli Alexander Management Ltd.
REPORTED SHARE PERFORMANCE ON THE HELSINKI STOCK EXCHANGE
Digia Plc shares are listed on the NASDAQ OMX Nordic Exchange under IT, IT
Consulting & Other Services. The company's short name is DIG1V. The lowest
reported share quotation was EUR 3.10 and the highest was EUR 4.59. The share
officially closed at EUR 3.10 on the last trading day. The trade-weighted
average was EUR 3.96. The Group's market capitalisation totalled EUR 64,714,500
at the end of the reporting period.
The company received the following flagging notifications during the reporting
period:
- Ilmarinen Mutual Pension Insurance Company announced on 18 February
2014 that its holding in the company had risen above the 10% flagging threshold
to 10.05% of all shares and votes in the company.
- The Ingman Group announced on 25 March 2014 that its holding in the
company had risen above the 20% flagging threshold to 20.12% of all shares and
votes.
- Jyrki Hallikainen announced on 7 July 2014 that his holding in the
company had fallen below the 10% flagging threshold to 7.83% of all shares and
votes.
STOCK OPTION SCHEMES
Digia Plc had no outstanding options.
Helsinki, 31 October 2014
Digia Plc
Board of Directors
BRIEFING
Digia will hold a briefing on its Interim Report for analysts on Friday, 31
October 2014 at 11 am, in the Tapiola cabinet of Hotel Scandic Simonkenttä,
Simonkatu 9, 00100 Helsinki, Finland. All are welcome.
FURTHER INFORMATION
Juha Varelius, President and CEO, mobile: +358 400 855 849, email:
juha.varelius@digia.com
The Interim Report and the CEO's presentation will be available on
www.digia.com, in the ‘Investors' section, from 11 am on 31 October 2014.
DISTRIBUTION
NASDAQ OMX Helsinki
Key media
CONDENSED FINANCIAL STATEMENTS AND NOTES
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Cash Flow Statement
Consolidated Statement of Changes In Shareholders' Equity
Notes to the accounts
CONSOLIDATED INCOME STATEMENT, EUR 1,000
EUR 1,000 7-9/2014 7-9/201 Change, 1-9/201 1-9/201 Change, 2013
3 % 4 3 %
--------------------------------------------------------------------------------
NET SALES 21,731.9 21,435. 1.4 % 70,187. 72,958. -3.8 % 99,740.5
2 1 7
--------------------------------------------------------------------------------
Other 302.7 305.9 -1.0 % 1,026.3 1,038.5 -1.2 % 1,542.7
operating
income
--------------------------------------------------------------------------------
Materials and -1,960.3 -1,871. 4.8 % -6,681. -8,955. -25.4 % -11,989.4
services 3 5 9
--------------------------------------------------------------------------------
Depreciation, -580.1 -708.5 -18.1 % -1,890. -2,215. -14.7 % -9,977.0
amortisation 0 1
and
impairment
--------------------------------------------------------------------------------
Other -18,637.4 -18,163 2.6 % -60,640 -60,370 0.4 % -82,138.8
operating .8 .7 .6
expenses
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Operating 856.9 997.4 -14.1 % 2,001.2 2,455.6 -18.5 % -2,822.0
profit
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financial -307.1 -264.9 15.9 % -511.0 -536.6 -4.8 % -784.0
expenses
(net)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Earnings 549.8 732.5 -24.9 % 1,490.2 1,919.0 -22.3 % -3,605.9
before tax
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Income taxes -78.0 -278.2 -71.9 % -320.5 -589.8 -45.7 % -461.2
--------------------------------------------------------------------------------
NET PROFIT 471.7 454.3 3.8 % 1,169.8 1,329.2 -12.0 % -4,067.1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Other
comprehensiv
e income:
--------------------------------------------------------------------------------
Items which
may be
reclassified
subsequently
to profit or
loss:
--------------------------------------------------------------------------------
Exchange 80.8 214.0 -62.3 % -44.3 12.6 -36.2
differences
on
translation
of foreign
operations
--------------------------------------------------------------------------------
TOTAL 552.5 668.3 -17.3 % 1,125.5 1,341.8 -16.1 % -4,103.3
COMPREHENSIV
E INCOME
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Distribution
of net
profit:
--------------------------------------------------------------------------------
Parent-compan 471.7 454.3 3.8 % 1,169.8 1,329.2 -12.0 % -4,067.1
y
shareholders
--------------------------------------------------------------------------------
Minority 0.0 0.0 0.0 0.0 0.0
interest
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Distribution
of total
comprehensiv
e income:
--------------------------------------------------------------------------------
Parent-compan 552.5 668.3 -17.3 % 1,125.5 1,341.8 -16.1 % -4,103.3
y
shareholders
--------------------------------------------------------------------------------
Minority 0.0 0.0 0.0 0.0 0.0
interest
----------------------------------------------------------------------
----------------------------------------------------------------------
Earnings per 0.02 0.02 0.06 0.06 -0.20
share, EUR
----------------------------------------------------------------------
Earnings per 0.02 0.02 0.06 0.06 -0.20
share
(diluted),
EUR
----------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET, EUR 1,000
Assets 30 September 31 December Change,
2014 2013 %
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Non-current assets
--------------------------------------------------------------------------------
Intangible assets 52,617.0 53,327.2 -1.3 %
--------------------------------------------------------------------------------
Tangible assets 1,707.4 1,986.0 -14.0 %
--------------------------------------------------------------------------------
Financial assets 629.5 627.0 0.4 %
--------------------------------------------------------------------------------
Inventories 0.5 0.6 -8.9 %
--------------------------------------------------------------------------------
Long-term receivables 64.6 64.6 0.0 %
--------------------------------------------------------------------------------
Deferred tax assets 510.3 370.9 37.6 %
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total non-current assets 55,529.3 56,376.2 -1.5 %
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Current assets
--------------------------------------------------------------------------------
Current receivables 21,120.7 20,447.8 3.3 %
--------------------------------------------------------------------------------
Available-for-sale financial assets 328.2 324.0 1.3 %
--------------------------------------------------------------------------------
Cash and cash equivalents 2,574.2 6,129.8 -58.0 %
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total current assets 24,023.1 26,901.7 -10.7 %
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total assets 79,552.4 83,277.9 -4.5 %
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Shareholders' equity and liabilities 30 September 31 December Change,
2014 2013 %
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Share capital 2,087.6 2,087.6 0.0 %
--------------------------------------------------------------------------------
Rights issue 0.0 0.0
--------------------------------------------------------------------------------
Issue premium fund 7,899.5 7,899.5 0.0 %
--------------------------------------------------------------------------------
Other reserves 5,203.8 5,203.8 0.0 %
--------------------------------------------------------------------------------
Unrestricted invested shareholders' 31,370.3 33,447.8 -6.2 %
equity
--------------------------------------------------------------------------------
Translation difference 473.3 517.6 -8.6 %
--------------------------------------------------------------------------------
Retained earnings -12,985.7 -9,028.6 -43.8 %
--------------------------------------------------------------------------------
Net profit 1,169.8 -4,067.1 128.8 %
--------------------------------------------------------------------------------
Equity attributable to parent-company 35,218.5 36,060.6 -2.3 %
shareholders
--------------------------------------------------------------------------------
Minority interest 0.0 0.0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total shareholders' equity 35,218.5 36,060.6 -2.3 %
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Liabilities
--------------------------------------------------------------------------------
Long-term interest-bearing liabilities 12,338.4 12,741.9 -3.2 %
--------------------------------------------------------------------------------
Received long-term advances 1,103.3 2,876.5 -61.6 %
--------------------------------------------------------------------------------
Other long-term liabilities 0.0 0.0
--------------------------------------------------------------------------------
Deferred tax liabilities 278.1 461.0 -39.7 %
--------------------------------------------------------------------------------
Total long-term liabilities 13,719.8 16,079.4 -14.7 %
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Short-term interest-bearing liabilities 6,534.5 4,140.9 57.8 %
--------------------------------------------------------------------------------
Other short-term liabilities 24,079.6 26,996.9 -10.8 %
--------------------------------------------------------------------------------
Total short-term liabilities 30,614.1 31,137.8 -1.7 %
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total liabilities 44,333.9 47,217.3 -6.1 %
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Shareholders' equity and liabilities 79,552.4 83,277.9 -4.5 %
--------------------------------------------------------------------------------
CONSOLIDATED CASH FLOW STATEMENT, EUR 1,000
1 Jan 2014-30 Sep 1 Jan 2013-30 Sep
2014 2013
--------------------------------------------------------------------------------
Cash flow from operations:
--------------------------------------------------------------------------------
Net profit 1,170 1,329
--------------------------------------------------------------------------------
Adjustments to net profit 403 563
--------------------------------------------------------------------------------
Change in working capital -4,797 -74
--------------------------------------------------------------------------------
Interest paid -242 -328
--------------------------------------------------------------------------------
Interest income 0 0
--------------------------------------------------------------------------------
Taxes paid -135 200
--------------------------------------------------------------------------------
Net cash flow from operations -3,601 1,690
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash flow from investments:
--------------------------------------------------------------------------------
Purchases of tangible and intangible -904 -394
assets
--------------------------------------------------------------------------------
Cash flow from investments -904 -394
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash flow from financing:
--------------------------------------------------------------------------------
Proceeds from share issue 0 0
--------------------------------------------------------------------------------
Acquisition of own shares 0 0
--------------------------------------------------------------------------------
Repayment of current loans -2,000 -3,500
--------------------------------------------------------------------------------
Repayments of non-current loans 0 0
--------------------------------------------------------------------------------
Withdrawals of current loans 3,000 3,000
--------------------------------------------------------------------------------
Withdrawals of non-current loans 1,758 0
--------------------------------------------------------------------------------
Dividends paid and other profit -1,804 -2,082
distribution
--------------------------------------------------------------------------------
Cash flow from financing 954 -2,582
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Change in liquid assets -3,551 -1,287
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Liquid assets at beginning of period 6,454 8,283
--------------------------------------------------------------------------------
Change in fair value
--------------------------------------------------------------------------------
Change in liquid assets -3,551 -1,287
--------------------------------------------------------------------------------
Liquid assets at end of period 2,903 6,997
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY, EUR 1,000
a b c d e f g h
--------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY, 2,088 0 7,899 33,448 5,204 554 -7,129 42,063
01/01/2013
--------------------------------------------------------------------------------
Net profit 1,329 1,329
--------------------------------------------------------------------------------
Other comprehensive income 13 13--------------------------------------------------------------------------------
Dividends -2,082 -2,082
--------------------------------------------------------------------------------
Share-based payments 457 457
recognised against equity
--------------------------------------------------------------------------------
Other items
--------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY 2,088 0 7,899 33,448 5,204 566 -7,425 41,780
30/09/2013
--------------------------------------------------------------------------------
a b c d e f g h
--------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY, 1 2,088 0 7,899 33,448 5,204 518 -13,096 36,061
January 2014
--------------------------------------------------------------------------------
Net profit 1,170 1,170
--------------------------------------------------------------------------------
Other comprehensive income -44 -44
--------------------------------------------------------------------------------
Repayment of capital -2,078 -2,078
--------------------------------------------------------------------------------
Share-based payments 110 110
recognised against equity
--------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY, 30 2,088 0 7,899 31,370 5,204 473 -11,816 35,218
September 2014
--------------------------------------------------------------------------------
a = share capital
b = rights issue
c = share premium
d = unrestricted invested shareholders' equity
e = other reserves
f = currency translation differences
g = retained earnings
h = total shareholders' equity
NOTES TO THE ACCOUNTS
Accounting principles:
The interim report has been prepared in compliance with IFRS and the IAS 34
standard. This interim report is based on unaudited figures. Otherwise, the
same accounting principles have been applied as in the 2013 financial
statements. The accounting principles and formulae for the calculation of key
figures and ratios are unchanged and are presented in the 2013 financial
statements.
Seasonal nature of business:
The Group's business is affected by the number of workdays each month, as well
as by holiday seasons.
Dividends paid:
Dividends paid in the form of capital repayments during the reporting period
totalled EUR 2,081,827.30.
Related-party transactions:
Digia Group's related parties include the CEO and the members of the Board of
Directors and Group Management Team. Digia Group had no significant
transactions with related parties during the reporting period.
Segment information:
Digia's business operations are divided into two main business segments:
Domestic and Qt.
NET SALES, EUR 7-9/201 7-9/201 Change, 1-9/201 1-9/201 Change, 2013
1,000 4 3 % 4 3 %
--------------------------------------------------------------------------------
Domestic 16,783 16,401 2.3 % 55,627 58,052 -4.2 % 79,850
operations
--------------------------------------------------------------------------------
Qt operations 4,949 5,034 -1.7 % 14,560 14,908 -2.3 % 19,891
--------------------------------------------------------------------------------
Digia Group 21,732 21,435 1.4 % 70,187 72,959 -3.8 % 99,740
--------------------------------------------------------------------------------
OPERATING PROFIT 7-9/20 7-9/20 Change, 1-9/20 1-9/20 Change, 2013
BEFORE EXTRAORDINARY 14 13 % 14 13 %
ITEMS, EUR 1,000
--------------------------------------------------------------------------------
Domestic operations 1,197 1,114 7.4 % 3,616 2,741 31.9 % 5,395
--------------------------------------------------------------------------------
Qt operations -340 -117 -191.1 % -1,614 -286 -465.1 % -846
--------------------------------------------------------------------------------
Digia Group 857 997 -14.1 % 2,001 2,456 -18.5 % 4,549
--------------------------------------------------------------------------------
OPERATING PROFIT, 7-9/201 7-9/201 Change, 1-9/20 1-9/201 Change, 2013
EUR 1,000 4 3 % 14 3 %
--------------------------------------------------------------------------------
Domestic 1,197 1,114 7.4 % 3,616 2,741 31.9 % -1,976
operations
--------------------------------------------------------------------------------
Qt operations -340 -117 -191.1 % -1,614 -286 -465.1 % -846
--------------------------------------------------------------------------------
Digia Group 857 997 -14.1 % 2,001 2,456 -18.5 % -2,822
--------------------------------------------------------------------------------
ASSETS, EUR 1,000 30 September 2014 31 December 2013
--------------------------------------------------------
Domestic operations 50,791 53,199
--------------------------------------------------------
Qt operations 16,916 17,021
--------------------------------------------------------
Unallocated 11,845 13,058
--------------------------------------------------------
Digia Group 79,552 83,278
--------------------------------------------------------
Consolidated income statement by quarter:
EUR 1,000 7-9/2014 4-6/2014 1-3/2014 10-12/201 7-9/2013
3
--------------------------------------------------------------------------------
Net sales 21,731.9 24,497.2 23,957.9 26,781.8 21,435.2
--------------------------------------------------------------------------------
Other operating income 302.7 322.8 400.8 504.2 305.9
--------------------------------------------------------------------------------
Materials and services -1,960.3 -2,343.1 -2,378.0 -3,033.5 -1,871.3
--------------------------------------------------------------------------------
Depreciation, -580.1 -607.2 -702.8 -7,761.9 -708.5
amortisation and
impairment
--------------------------------------------------------------------------------
Other operating expenses -18,637.4 -20,444.9 -21,558.3 -21,768.2 -18,163.8
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Operating profit 856.9 1,424.8 -280.4 -5,277.6 997.4
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financial expenses (net) -307.1 -53.2 -150.8 -247.3 -264.9
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Earnings before tax 549.8 1,371.6 -431.2 -5,524.9 732.5
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Income taxes -78.0 -342.8 100.4 128.6 -278.2
--------------------------------------------------------------------------------
Net profit 471.7 1,028.9 -330.8 -5,396.3 454.3
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Allocation:
--------------------------------------------------------------------------------
Parent-company 471.7 1,028.9 -330.8 -5,396.3 454.3
shareholders
--------------------------------------------------------------------------------
Minority interest 0.0 0.0 0.0 0.0 0.0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Earnings per share, EUR 0.02 0.05 -0.02 -0.26 0.02
--------------------------------------------------------------------------------
Earnings per share 0.02 0.05 -0.02 -0.26 0.02
(diluted), EUR
--------------------------------------------------------------------------------
Group key figures and ratios:
EUR 1,000 1-9/2014 1-9/2013
------------------------------------------------------------------------------
Extent of business:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Net sales 70,187 72,959
------------------------------------------------------------------------------
- change from previous year -3.8 % -2.7 %
------------------------------------------------------------------------------
Average capital invested 53,517 61,278
------------------------------------------------------------------------------
Personnel at period end 933 937
------------------------------------------------------------------------------
Average number of personnel 935 939
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Profitability:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Operating profit before extraordinary items and impairment 2,001 2,456
------------------------------------------------------------------------------
- % of net sales 2.9 % 3.4 %
------------------------------------------------------------------------------
Operating profit 2,001 2,456
------------------------------------------------------------------------------
- % of net sales 2.9 % 3.4 %
------------------------------------------------------------------------------
Earnings before tax 1,490 1,919
------------------------------------------------------------------------------
- % of net sales 2.1 % 2.6 %
------------------------------------------------------------------------------
Net profit 1,170 1,329
------------------------------------------------------------------------------
% of net sales 1.7 % 1.8 %
------------------------------------------------------------------------------
Return on equity, % 4.4 % 4.2 %
------------------------------------------------------------------------------
Return on investment, % 5.6 % 5.7 %
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Financing and financial standing:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Interest-bearing liabilities 18,873 18,864
------------------------------------------------------------------------------
Short-term investments & cash and bank receivables 2,902 6,997
------------------------------------------------------------------------------
Net gearing 45.3 % 28.4 %
------------------------------------------------------------------------------
Equity ratio 50.7 % 54.8 %
------------------------------------------------------------------------------
Net cash flow from operations -3,601 1,690
------------------------------------------------------------------------------
Earnings per share, undiluted (EUR) 0.06 0.06
------------------------------------------------------------------------------
Earnings per share, diluted (EUR) 0.06 0.06
------------------------------------------------------------------------------
Equity/share, EUR 1.69 2.00
------------------------------------------------------------------------------
Lowest share trading price, EUR 3.10 2.65
------------------------------------------------------------------------------
Highest share trading price, EUR 4.59 3.88
------------------------------------------------------------------------------
Average share price, EUR 3.96 3.09
------------------------------------------------------------------------------
Market capitalisation 64,714 78,701
------------------------------------------------------------------------------
Formulae for key figures and ratios are presented in the 2013 financial
statements. These remained unchanged during the reporting period.
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